NAIROBI, Jul 15 (Reuters) – Loans restructured by small and medium-sized businesses in Kenya jumped tenfold in 2020 from a year earlier, largely due to the impact of COVID-19, the central bank said Thursday.
The central bank took action last year to help these businesses weather the economic downturn caused by the coronavirus, many of which are at risk of shutting down.
As part of these measures to mitigate problem borrowers, the central bank allowed banks in March 2020 to restructure loans for those companies affected by the COVID-19 pandemic.
The central bank said Thursday that the volume of loans restructured to small and medium-sized enterprises totaled 234.7 billion shillings ($ 2.17 billion) last year, up from 20.6 billion shillings in 2019.
“In 2020, the restructuring was largely driven by the negative impact of the COVID-19 pandemic and was aimed at mitigating the impact on affected borrowers by easing debt service terms,” the central bank said in a review.
It says the trade sector accounted for 74.2% of restructured loans in 2020.
The term for rendering assistance to clients by banks ended on March 2 this year.
The central bank said that at that time, the amount of loans, the terms of repayment of which were changed by lenders, at the end of February this year amounted to 569.3 billion shillings ($ 5.19 billion).
This represents 19% of total loans, compared with 57% of total restructured loans at the height of the crisis, the bank said.
In October, the government created a loan guarantee scheme for small and medium-sized businesses hit by the coronavirus and said it expects its capital to eventually grow to at least 100 billion shillings.
Kenya expects its economy to recover this year: Treasury Department predicts economic growth of 6.6% in 2021, up from 0.6% in 2020, when industries such as tourism and related services collapsed due to restrictions related to COVID-19. (1 dollar = 108.1000 Kenyan shillings) (Report by George Obulutz; editing by Omar Mohammed and Jane Merriman)